1. What did the Trump administration announce about student loan collections?
The Education Department announced Friday it is delaying plans to withhold pay from borrowers who default on their federal student loans. The administration had planned to restart wage garnishments this month after a pandemic-era pause, but is now keeping involuntary collections on hold while it finalizes new repayment plans.
2. What types of penalties are being delayed, and who would be affected?
The pause applies to both wage garnishment and the withholding of federal tax refunds for borrowers in default — meaning those at least 270 days behind on payments. More than 5 million Americans were in default on federal student loans as of September, and millions more have fallen behind and risk defaulting this year.
3. When will these collection efforts resume?
The department has not set a new date for restarting involuntary collections. Officials said the delay will give borrowers time to evaluate new repayment plans scheduled to become available starting July 1.
SEE ALSO: Trump administration delays plan to withhold wages for student loan borrowers in default
4. What prompted this reversal in policy?
The Education Department said involuntary collection efforts will “function more efficiently and fairly” after the administration implements improvements to the student loan system. Student loan advocates had urged against resuming garnishment, warning it would have been “economically reckless” and risked pushing nearly 9 million defaulted borrowers further into debt.
5. What changes are coming to student loan repayment plans?
Congress ordered the department to overhaul repayment plans that had become too confusing. New borrowers will have two options: a standard plan and an income-based plan that lowers payments based on the borrower’s earnings. Last month, the department scrapped the SAVE Plan created under President Biden, which had been blocked by a federal judge after legal challenges from Missouri and other states.
Read more: Trump administration delays plan to withhold wages for student loan borrowers in default
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